Will NVIDIA Be the Leader of the Virtual Reality Market as Well?

When it comes to tech stocks, NVIDIA (NVDA) is probably the best in class. The chipmaker has its presence in many growing markets and given its record of success, it undeniable that the company will succeed in the future as well. Although NVIDIA’s valuation is a bit rich, I think the company’s presence in the virtual reality market makes it worth it.

NVIDIA has outperformed the stock market in 2015. While shares of its primary rival Advanced Micro Devices (AMD) have performed better, NVIDIA is still a better investment.
NVIDIA has grasped a robust position in the GPU market. NVIDIA has an extremely diversified business model. Apart from its mobile graphics processor, NVIDIA is a growing force in the driverless car segment with its Drive PX2 platform and its latest release of the DGX-1 supercomputer further fortified its position. On the other hand, the company is also using its existing line of graphics processors to aid usher in the approaching virtual reality thrive as well.

NVIDIA has at least two benefits in the virtual reality division over its foremost rival AMD. NVIDIA is the prominent provider of desktop graphics processor units required to power high-end Virtual Reality devices like the HTC Vive and Oculus Rift.

At present, less than one percent of PCs in the market are able to handle strong graphics processing requirements of the Vive and Rift. However, NVIDIA observes that small percentage as an enormous region for development. As per TrendForce, the Virtual Reality market is predicted to surge to $70 billion from around $6.7 billion by 2020, comprising 171 million active Virtual Reality consumers just after two years from today.

According to PCGamer.com, for users to experience Virtual Reality, a strong PC with powerful GPU is must, and the company formerly introduced one of the superior graphics processors in the market. The company has already partnered with 100 PC manufacturers to make Virtual-Reality ready desktops. Also, its GeForce GTX 980 GPUs are the only VR-ready notebooks in the market.

NVIDIA’s GPUs also features Direct Mod, which proposes plug-and-play compatibility amid the Virtual Reality devices and the GPU. NVIDIA is not the only firm in the VR segment, but it accounts for over 76 percent of the discrete desktop GPU market, whereas its foremost rival AMD accounts for less than 24 percent.

Due to NVIDIA’s presence in the VR industry, investors can still be bullish on the stock in the long future.
Published on May 2, 2016
By Vinay Singh

Copyrighted 2016. Content published with author's permission.

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